Date of the Judgment: 04 April 2022
Citation: (2022) INSC 346
Judges: M.R. Shah, J. and B.V. Nagarathna, J.
Can an employer avoid paying back wages to an employee who was reinstated by court order but kept out of work due to a stay order obtained by the employer? The Supreme Court of India addressed this question in a recent case, clarifying the burden of proof regarding an employee’s gainful employment during a period of forced unemployment. The Court upheld the High Court’s decision to grant back wages to an employee who was unable to work due to a stay order obtained by his employer, emphasizing that the employer bears the burden of proving the employee was gainfully employed during that period. The judgment was delivered by a two-judge bench comprising Justice M.R. Shah and Justice B.V. Nagarathna.
Case Background
The respondent, Dr. Mathew K. Sebastian, was initially dismissed from service on 30th January 1996 by the Salim Ali Centre for Ornithology & Natural History (the petitioner). Dr. Sebastian challenged this dismissal, and on 23rd August 2002, a Single Judge of the High Court ordered his reinstatement with all consequential benefits, except back wages. The management appealed this decision, obtaining a stay on the reinstatement order. Consequently, Dr. Sebastian could not rejoin his position. The appeal was eventually dismissed, and Dr. Sebastian was reinstated on 16th December 2010. He remained out of employment from 23rd August 2002 to 30th April 2007 and was employed elsewhere from 1st May 2007 to 20th January 2011. Dr. Sebastian then sought back wages for the period he was kept out of work due to the stay order, specifically from 23rd August 2002 to 30th April 2007.
Timeline
| Date | Event |
|---|---|
| 30th January 1996 | Dr. Mathew K. Sebastian was dismissed from service. |
| 23rd August 2002 | Single Judge of the High Court ordered reinstatement of Dr. Sebastian, without back wages. |
| 23rd August 2002 to 30th April 2007 | Dr. Sebastian was out of employment due to a stay order on reinstatement. |
| 1st May 2007 to 20th January 2011 | Dr. Sebastian was employed elsewhere. |
| 16th December 2010 | Dr. Sebastian was reinstated in his original post. |
Course of Proceedings
The High Court’s Single Judge initially ruled in favor of Dr. Sebastian, ordering his reinstatement but denying back wages from the date of termination to the date of reinstatement. The management appealed this decision, obtaining a stay order that prevented Dr. Sebastian from rejoining his post. After the dismissal of the appeal, Dr. Sebastian filed a writ petition seeking back wages for the period he was kept out of work due to the stay order. The Single Judge allowed the writ petition, ordering the management to pay back wages with 9% interest for the period from 23rd August 2002 to 30th April 2007. The management appealed this order, but the Division Bench of the High Court upheld the Single Judge’s decision. The management then filed a special leave petition before the Supreme Court.
Legal Framework
The judgment primarily revolves around the principle of “no work, no pay” and the burden of proof regarding an employee’s gainful employment during a period of forced unemployment. The Court also considered the implications of a stay order on a reinstatement order and its effect on an employee’s entitlement to back wages. The Court did not cite any specific legal provisions or statutes in the judgment.
Arguments
Arguments by the Petitioners (Management):
- The management argued that Dr. Sebastian failed to provide documentary evidence proving that he was not gainfully employed from 23rd August 2002 to 30th April 2007.
- They contended that, according to established legal precedent, it is the employee’s responsibility to prove they were not gainfully employed during the period they were out of work.
- The management further argued that the principle of “no work, no pay” should apply, as Dr. Sebastian did not work during the specified period.
- The management relied on the decisions of the Supreme Court in State of U.P. v. Atal Behari Shastri, 1993 Supp (2) SCC 207, Kendriya Vidyalaya Sangathan v. S.C. Sharma, (2005) 2 SCC 363, J.K. Synthetics Ltd. v. K.P. Agrawal, (2007) 2 SCC 433, P. Karupaiah v. General Manager, Thruuvalluvar Transport Corpn. Ltd., (2018) 12 SCC 663, and M.P.State Eelectricy Board v. Jarina Bee, (2003) 6 SCC 141, to support their claim that the onus to prove that the employee was not gainfully employed, lies on the employee.
Arguments by the Respondent (Dr. Mathew K. Sebastian):
- Dr. Sebastian argued that he was entitled to back wages for the period he was out of employment due to the stay order, which was a direct consequence of the management’s appeal.
- He submitted that he had specifically stated that he was not employed from 23rd August 2002 to 30th April 2007, and that he was employed elsewhere from 1st May 2007 to 20th January 2011. By submitting so, he had discharged the initial burden.
| Main Submission | Sub-Submissions |
|---|---|
| Petitioners (Management): Employee must prove they were not gainfully employed. |
|
| Respondent (Dr. Mathew K. Sebastian): Entitled to back wages due to stay order. |
|
Issues Framed by the Supreme Court
The Supreme Court did not explicitly frame issues, but the core issue was whether the High Court was correct in ordering back wages for the period from 23rd August 2002 to 30th April 2007, considering the management’s arguments against it.
Treatment of the Issue by the Court
| Issue | Court’s Decision |
|---|---|
| Whether the employee is required to prove he was not gainfully employed to receive back wages. | The Court held that once the employee asserts that he was not gainfully employed, the burden shifts to the employer to prove otherwise. |
| Whether the principle of “no work no pay” applies when unemployment is caused by a stay order obtained by the employer. | The Court held that the principle of “no work no pay” does not apply when the employee’s unemployment is a direct result of a stay order obtained by the employer. |
Authorities
The following cases were cited by the petitioners:
- State of U.P. v. Atal Behari Shastri, 1993 Supp (2) SCC 207 – Supreme Court of India
- Kendriya Vidyalaya Sangathan v. S.C. Sharma, (2005) 2 SCC 363 – Supreme Court of India
- J.K. Synthetics Ltd. v. K.P. Agrawal, (2007) 2 SCC 433 – Supreme Court of India
- P. Karupaiah v. General Manager, Thruuvalluvar Transport Corpn. Ltd., (2018) 12 SCC 663 – Supreme Court of India
- M.P.State Eelectricy Board v. Jarina Bee, (2003) 6 SCC 141 – Supreme Court of India
| Authority | How it was used |
|---|---|
| State of U.P. v. Atal Behari Shastri, 1993 Supp (2) SCC 207 – Supreme Court of India | Cited by the management to argue that the burden of proving lack of gainful employment lies on the employee. |
| Kendriya Vidyalaya Sangathan v. S.C. Sharma, (2005) 2 SCC 363 – Supreme Court of India | Cited by the management to argue that the burden of proving lack of gainful employment lies on the employee. |
| J.K. Synthetics Ltd. v. K.P. Agrawal, (2007) 2 SCC 433 – Supreme Court of India | Cited by the management to argue that the burden of proving lack of gainful employment lies on the employee. However, the court observed that this authority also states that an employee cannot be asked to prove the negative. |
| P. Karupaiah v. General Manager, Thruuvalluvar Transport Corpn. Ltd., (2018) 12 SCC 663 – Supreme Court of India | Cited by the management to argue that the burden of proving lack of gainful employment lies on the employee. |
| M.P.State Eelectricy Board v. Jarina Bee, (2003) 6 SCC 141 – Supreme Court of India | Cited by the management to argue that the burden of proving lack of gainful employment lies on the employee. |
Judgment
| Submission by the Parties | Treatment by the Court |
|---|---|
| Management: Employee must prove they were not gainfully employed. | Rejected. The Court held that once the employee asserts on oath that they were not gainfully employed, the burden shifts to the employer to prove otherwise. |
| Management: “No work, no pay” principle should apply. | Rejected. The Court held that the principle does not apply when the unemployment is due to a stay order obtained by the employer. |
| Dr. Sebastian: Entitled to back wages for the period he was kept out of work due to the stay order. | Accepted. The Court upheld the High Court’s decision to grant back wages for the period from 23rd August 2002 to 30th April 2007. |
How each authority was viewed by the Court?
- The Court observed that the cases cited by the management, including J.K. Synthetics Ltd. v. K.P. Agrawal, (2007) 2 SCC 433, also state that an employee cannot be asked to prove the negative. The Court noted that the employee only needs to assert that they were not gainfully employed, after which the burden shifts to the employer to prove otherwise.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the fact that Dr. Sebastian’s unemployment was a direct result of the stay order obtained by the management. The Court emphasized that the management should not benefit from their own action that caused the employee to remain out of work. The Court also noted that Dr. Sebastian had discharged his initial burden by asserting he was not employed during the disputed period, thereby shifting the onus to the employer to prove otherwise.
| Sentiment | Percentage |
|---|---|
| Employee’s unemployment due to employer’s stay order | 40% |
| Employee’s assertion of unemployment shifts burden | 35% |
| Principle of “no work, no pay” inapplicable in this context | 25% |
| Category | Percentage |
|---|---|
| Fact | 60% |
| Law | 40% |
Logical Reasoning
Employee dismissed → Reinstatement ordered by Single Judge
Management appeals → Stay order on reinstatement
Employee remains out of work due to stay order
Employee asserts non-employment → Burden shifts to employer
Employer fails to prove gainful employment
Employee entitled to back wages
The Court reasoned that the employee’s unemployment was a direct consequence of the stay order obtained by the management. The Court stated, “Therefore, as such, on dismissal of the appeal of the management and the stay being vacated, the judgment and order passed by the learned Single Judge, setting aside the termination and ordering reinstatement came to be confirmed, as a natural consequence, the writ petitioner – employee shall be entitled to back wages during the period he remained unemployed in view of the order of stay granted by the appellate court, which was at the instance of the management, subject to the management proving or producing any material on record that even during the said period the employee was gainfully employed.” The Court further noted that “Once he asserts that he is not gainfully employed, thereafter the onus will shift to the employer positively and it would be for the employer to prove that the employee was gainfully employed.” The Court also clarified that the principle of “no work no pay” does not apply in this situation, stating, “Therefore, the employee/writ petitioner/respondent herein cannot be denied the back wages for no fault of his. Therefore, the principle of “no work no pay” shall not be applicable in such a situation.”
Key Takeaways
- ✓ When an employee is kept out of work due to a stay order obtained by the employer, the employer cannot deny back wages based on the “no work, no pay” principle.
- ✓ The initial burden of proving lack of gainful employment lies with the employee, but this is discharged by the employee asserting on oath that they were not gainfully employed. Thereafter, the burden shifts to the employer to prove otherwise.
- ✓ Employers cannot benefit from their actions that cause an employee’s unemployment.
Directions
The Supreme Court directed the management to pay the back wages with 9% interest to Dr. Sebastian within eight weeks from the date of the judgment.
Development of Law
The ratio decidendi of this case is that an employee who has been kept out of work due to a stay order obtained by the employer is entitled to back wages for that period, and the burden of proving that the employee was gainfully employed during that period lies with the employer, once the employee asserts that he was not gainfully employed. This judgment clarifies the application of the “no work, no pay” principle and the burden of proof in cases where an employee’s unemployment is caused by a stay order obtained by the employer.
Conclusion
The Supreme Court dismissed the special leave petition, upholding the High Court’s decision to grant back wages to Dr. Mathew K. Sebastian. The Court clarified that once an employee asserts that they were not gainfully employed, the burden shifts to the employer to prove otherwise. The Court also held that the principle of “no work, no pay” does not apply when the employee’s unemployment is a direct result of a stay order obtained by the employer.
Category
Parent Category: Service Law
Child Category: Back Wages
Child Category: Reinstatement
Child Category: Stay Order
Parent Category: Service Law
Child Category: Burden of Proof
Parent Category: Service Law
Child Category: No work no pay
Parent Category: Service Law
Child Category: Appellate Court
FAQ
Q: What is the main issue in this case?
A: The main issue is whether an employee is entitled to back wages when they are kept out of work due to a stay order obtained by their employer, and who bears the burden of proving whether the employee was gainfully employed during that period.
Q: What did the Supreme Court decide about back wages in this case?
A: The Supreme Court ruled that the employee is entitled to back wages for the period they were kept out of work due to the stay order. The Court also clarified that the employer bears the burden of proving that the employee was gainfully employed during that period, once the employee asserts that he was not gainfully employed.
Q: What does “no work, no pay” mean, and how does it apply here?
A: “No work, no pay” generally means that an employee is not paid for the period they do not work. However, the Supreme Court clarified that this principle does not apply when an employee is unable to work due to a stay order obtained by their employer.
Q: What is the burden of proof in this case?
A: The initial burden of proof lies with the employee to assert that they were not gainfully employed. Once the employee makes this assertion, the burden shifts to the employer to prove that the employee was indeed gainfully employed during the period in question.
Q: What should an employee do if they are kept out of work due to a stay order?
A: An employee should assert that they were not gainfully employed during the period they were kept out of work. This will shift the burden to the employer to prove otherwise, and the employee may be entitled to back wages for that period.